Now that was a well-timed retirement at Suncorp (SUN) which yesterday reported a slide in interim profit and cut its half year payout to shareholders as a result.
Former Suncorp Group CEO Patrick Snowball ended his time at the company at last October’s annual meeting and has returned to Britain. He oversaw some significant changes at the insurer/regional banking business based in Brisbane and helped it recover from the edge of a black hole during the GFC.
He also had to handle the impact of the Brisbane floods and associated losses in 2011 from other weather events (the flooding in central Queensland) and bad cyclones.
And while he was paid $37 million over the six years he ran the company well with its the weather-related losses and battling an increasingly competitive car insurance sector (AAMI, GIO and Suncorp are some of its major brands).
Mr Snowball’s retirement was well-timed because the first half result from the group yesterday was nothing to write home about as the impact of the jump in weather claims hit hard, and recovering from that will prove to be a good test for newish CEO Michael Cameron.
Suncorp revealed a 16% slide in net profit and a sharp drop in interim dividend (no talk of sustainable dividends’ today at this company as there was at the Commonwealth Bank on Wednesday). Net profit for the half was $530 million, compared with last year’s $631 million.
Interim dividend was cut to 30 cents a share from 38 cents, so it’s a big ouch for shareholders.
The reason for the slide – storms, cyclones and floods in NSW and Queensland in the first half of the year, and the spillover from bad weather earlier in the year.
SUN 1Y – Storms see Suncorp dividend slashed
Chairman Dr Ziggy Switkowski said the lower interim dividend of 30 cents a share represented a a payout ratio of 69% of cash earnings.
“The interim dividend reflects positive earnings contribution from across the Group’s diversified insurance and banking businesses. The half year net profit after tax of $530 million demonstrates the benefits of a financial services conglomerate with the Banking and Life operations delivering improved underlying profits at a time when General Insurance earnings have been impacted by external headwinds and operational issues,” Dr Switkowski said in yesterday’s statement.
The group’s insurance trading ratio fell to 10.1% from 14.8% a year earlier. Those weather-related claims totalled $4 billion over calendar 2015.
Watch for weak results from Insurance Australia Group as well (it has already issued a warning last year).
The shares eased for most of the day in the market but ended up flat at the end on $10.70.
Analysts had long worked out that the bad weather would take a toll on profits and dividends.
